"Brother can you spare a dime?"

By Clifford F. Thies

For the second month in a row, the unemployment rate has fallen while the number of Americans employed has dropped. This is not good news. It means that more and more people who normally would be looking for work are not looking because they do not think they can find work. The spread of discouragement among workers is a disaster. Yet, Obamanoids consider the fall in the unemployment rate to be good news.

Let us look back to the economy of March 2007, an economy that was being described as "the worst economy since the Great Depression." Back then, the unemployment rate was 4.4 percent and the number of discouraged workers, as a percent of the labor force, was 0.2, for a combined, expanded definition of the unemployment rate of 4.6. In December 2010, the unemployment rate was 9.7 percent and the number of discouraged workers, as a percent of the labor force, was 3.9, for an expanded definition of the unemployment rate of 13.6. Whatever the government is doing is not working.

Roosevelt's Democrat Depression Redux

If we consider the problem of short-hours, we would see an even worse picture. Of those who have jobs, 8.3 million are working part-time when they would prefer to work full-time. Treating these people as partially employed and partially unemployed results in an unemployment rate of 16.4 percent. This is the kind of unemployment situation that the economy "settled-into" under President Franklin D. Roosevelt during the 1930s.

President Roosevelt "tackled" the economic crisis he inherited with a mix of policies known as the New Deal. Famously, this included a greatly-expanded role of government in terms of spending, taxing and regulating the economy.

The Works Progress Administration and related works projects of the New Deal deserve special comment. FDR called for programs to directly employ many of those who were out of work. The purpose of these programs was not simply to provide income security. They were to maintain physical vitality and the "habit of work." FDR recognized that people out of work more than six months start to lose the ability to work because their job skills atrophy and because of the erosion of the pride that comes from being a productive member of society.

Pay in these work projects was low, so that upon the eventual recovery of the economy, workers would spontaneously transfer to the private sector where they would make more money. Furthermore, these work projects were mainly concerned with the construction of public infrastructure, such as roads and bridges, dams and irrigation projects, so that - when the bonds floated by the government to finance the projects came due - the tax revenues generated by an expanded economy, as opposed to higher tax rates, would pay the bill.

Democrat pork spending, not Jobs

Did the stimulus of last year follow the example of this part of the New Deal? No, it did not. In spite of the Congressional testimony of just about every economist, that the stimulus be directed to infrastructure, in the end, only 6 percent of the money was targeted that way. The bill was little more than a humongous pork barrel for the special interests that constitute the Democratic Party, money that has been borrowed and spent with nothing remaining but a huge increase in the national debt.

With so many people discouraged from looking for work and with the majority of those counted as unemployed being out of work more than six months, the number of us remaining "at the oars" is fast shrinking. But, don't worry, our government tells the foreigners who own our national debt, we will beat the drum faster and crack the whip harder on the fools.

Editor's Note - Dr. Thies is a professor of economics at Shenandoah Univ. in Virginia. He is also a former Libertarian National Committee member, and former National Chairman of the Republican Liberty Caucus.